Daijiworld Media Network – New Delhi
New Delhi, Sep 22: India’s booming IT services sector could face a slowdown, with export growth likely dipping below 4 per cent, following a sharp hike in H-1B visa fees by the United States, according to a report by Emkay Global.
The report had earlier projected a 5 per cent growth for FY26 and a 7 per cent compounded annual growth rate (CAGR) over the next five years. However, with the fresh visa-related risks, the outlook has turned cautious.
India’s IT/software exports stood at USD 181 billion gross and USD 160 billion net in FY25. Of this, Global Capability Centres (GCCs) alone contributed more than USD 65 billion.
The U.S. recently increased H-1B visa application fees to USD 100,000 per new visa, a steep rise from the earlier USD 1,500–4,000 range. While the change does not affect existing visa holders or renewals, it significantly raises costs for Indian IT companies that rely on new on-site visas for project execution.
“Near-term impact may be limited on IT revenue/margins. However, if sustained, it could disturb Indian IT exports, pressurise project margins, disrupt supply chains and on-site projects,” said Madhavi Arora, Chief Economist at Emkay Global. She added that a gradual shift towards offshore delivery models could help offset some of the challenges.
Industry Reactions
Kotak Mahindra AMC’s MD, Nilesh Shah, remarked that while Indian IT companies may adapt, Indian professionals could be more adversely affected. “We need to create an ecosystem in India so our talent doesn’t have to go abroad. Abrupt changes like H-1B restrictions may, in fact, hurt the U.S. economy in the long run,” he said.
Experts believe the sector’s resilience will depend on how fast IT companies pivot towards newer growth models and the continued evolution of GCCs in India. Still, if the higher visa costs persist — and with the proposed HIRE Act adding another layer of uncertainty — the traditional Indian IT export model could be tested like never before.
Despite the immediate challenges, analysts say the long-term shift towards offshore delivery could present new opportunities, even as short-term growth takes a hit.